The information includes:
The Issuer’s name, address, and website
The Issuer’s directors and officers
The principal occupation and employment for the last three years of each director and officer
The names of each person owning 20% or more of the Issuer’s voting securities
The risk factors associated with the investment
The Issuer’s business and business plan
How the proceeds of the offering will be used
The Issuer’s ownership and capital structure
A description of how rights exercised by the principals of the Issuer could affect investors
The compensation paid to us in the offering
A description of previous offerings by the Issuer
Whether the Issuer has previously failed to file the reports required by law
Transactions with officers, directors, and other “insiders”
Whether the Issuer would be disqualified from offering securities under Title III under the “bad actor” rules, if the effective date of those rules were different
A discussion of the Issuer’s financial condition
How the Issuer will deal with over-subscriptions
Where on the Issuers website it will post annual reports, and when the annual reports will be available
Financial information about the Issuer, as described below
Any other information necessary in order to make the statements made, in light of the circumstances in which they were made, not misleading
What types of financial information an Issuer must provide depends on three things:
How much money the Issuer is trying to raise in the current offering;
Whether this is the Issuer’s first offering using Title III; and
If this is not the Issuer’s first offering using Title III, how much the Issuer has raised in other Title III offerings during the last 12 months.
Where the amount of the Title III offering, together with all other Title III offerings of the same Issuer within the last 12 months is $107,000 or less, the Issuer must provide the Issuer’s total income, tax income, and total tax, as reported on the Issuer’s Federal tax return, certified by the principal executive officer of the Issuer; and financial statements of the Issuer, certified by the principal executive officer of the Issuer. If financial statements are available that have been reviewed or audited by a public accountant that is independent of the Issuer, then those financial statement will be used instead.
Where the amount of the Title III offering, together with all other Title III offerings of the same Issuer within the last 12 months, is more than $107,000, but less than $535,000 the Issuer must provide financial statements that have been reviewed by a public accountant that is independent of the Issuer, but If financial statements are available that have been audited by a public accountant that is independent of the Issuer, then those financial statement will be used instead.
Where the amount of the Title III offering, together with all other Title III offerings of the same Issuer within the last 12 months, is more than $535,000 the Issuer must provide: If this is the Issuer’s first Title III offering, financial statements that have been reviewed by a public accountant that is independent of the Issuer. If this is not the Issuer’s first Title III offering, financial statements that have been audited by a public accountant that is independent of the Issuer.
All financial statements must be prepared in accordance with U.S. “generally accepted accounting principles.” Financial statement reviews must be conducted in accordance with the Statements on Standards for Accounting and Review Services issued by the Accounting and Review Services Committee of the AICPA. Financial statement audits must be conducted in accordance with either (i) auditing standards of the AICPA, or (ii) the standards of the Public Company Accounting Oversight Board.
Expedited Offerings Due to COVID-19
Some Issuers may elect to conduct their offering on an Expedited Basis due to the ongoing COVID-19 pandemic. To qualify, business must meet all other qualifications to conduct a Regulation Crowdfunding Raise and additionally must have been formed and had operations for at least six (6) months prior to launching their campaign. Expedited Offerings may not provide certain financials that other offerings would, or else may provide these financials at a later date during the offering period. Additionally, Investors who have invested in Expedited Offerings may have their rights to cancel their investment commitments to as little as the 48 hours immediately following their investment. Expedited Offerings may also close prior to the 21 day threshold required by other offerings. Expedited Offerings will contain disclosures identifying the offering as being conducted on an Expedited Basis as well as information regarding financials and Investors cancellation rights.
If Information Changes Before Closing
If you make an investment commitment and there are important changes between the date of your commitment and the date the investment is concluded, then (1) the Issuer must notify you of the changes, (2) your investment commitment will be canceled automatically unless you reconfirm your commitment within five business days of receipt of the notice.
After You Invest
After you invest, the Issuer is generally required to file annual reports with the SEC and post them on its own website within 120 days after the end of the fiscal year. The annual report will typically include:
The same types of information included on the Form C you saw when you invested;
Updated financial statements certified by the principal executive officer of the Issuer (the financial statements don’t have to be reviewed or audited, but if the Issuer already has reviewed or audited financial statements, they must be provided); and
Updated disclosures about the Issuer’s financial condition.
The Issuer is allowed to stop filing annual reports upon the earlier to occur of:
The date the Issuer has filed at least one annual report and has fewer than 300 shareholders of record;
The date the Issuer has filed at least three annual reports and has total assets no greater than $10 million;
The date the Issuer or someone else buys all of the securities issued in the Title III offering;
The date the Issuer registers its securities and is required to file reports under the Securities Exchange Act of 1934; or
The date the Issuer is dissolved under state law.
At best, you will have current information about the Issuer once per year. If the Issuer stops providing annual reports, you won’t have current financial information about the Issuer at all.
An Issuer might hire a public relations firm or other third party to promote the Issuer’s offering on the Platform – for example, by talking about the offering in our chat room. Or an employee or founder of the Issuer might do the same thing. In either case, the person doing the promoting must identify himself or herself on the Platform and disclose that he or she is engaged in promotional activity. In the case of a third party, the third party must also disclose that it is being paid for its promotional activity.